Vestar Capital is working on a single-asset process on its portfolio company Circana (formerly called IRI) as a way to deliver liquidity back to limited partners in an older fund, sources told Buyouts.
The deal has been active since last year and is among a group of GP-led deals helping keep the secondaries market busy in the early part of the year. GP-led deals represented about 44 percent of the approximately $109 billion in total volume last year, with single-asset transactions representing the majority of such deals, according to Lazard’s 2023 full-year secondaries activity survey.
“We believe that the second-half volume in 2023 is a harbinger of a new, elevated normal for the GP-led segment,” Holcombe Green, Lazard’s global head of private capital advisory, said in the volume report. “As sponsors remain focused on delivering liquidity amid a challenging M&A and IPO environment, we expect 2024 volume to approach or exceed 2021 levels.”
Vestar’s process is approaching final close, two sources said. The firm is working with Evercore and Jefferies on the deal.
The potential size of the process is in the range of $1.2 billion, one of the sources said. The deal has a lead investor or investors, sources said.
Circana provides data and predictive analytics for health care organizations, retailers, financial services and media companies. Vestar invested in Circana in 2018 through its seventh fund, which closed on $1.1 billion in 2020.
New Mountain Capital, an earlier investor in the company, agreed to a 50/50 governance split in the company. Hellman & Friedman in 2022 merged its company NPD Group with IRI, forming Circana, the firm said in a statement. Vestar held on to a minority position in the company.
A continuation fund for a minority investment is a routine part of secondaries, according to a secondaries buyer. It’s a way to generate liquidity for LPs in an older fund in an investment that the sponsor has no control over, including exit timing.
“We want more liquidity back for LPs but we can’t sell the company, we’re not in control – it can make a lot of sense to say, ‘let’s get our LPs liquidity, this minority position will last another three or four years,’” the buyer said.
Helping drive GP-led volume is strengthening pricing, which for buyout processes has hovered at or above 90 percent of net asset value, according to Lazard’s volume survey. More than half of single-asset deals priced at par of a premium to NAV, the survey said.
“The most successful single-asset continuation funds involve trophy assets and excellent GP alignment,” the survey said. Healthcare was the most popular sector for single-asset deals last year, Lazard found. “Investors believed the industry offered strong downside protection due to a stable demand curve and was less correlated to the macro economy.”
Other large GP-led deals include Hellman & Friedman’s hybrid tender offer process across four assets, allowing LPs that rolled into past continuation funds to cash out for liquidity, Buyouts previously reported.
Leonard Green last year closed a $2.2 billion continuation fund process on four assets, led by AlpInvest Partners, Buyouts reported.